I've Moved to Keller Williams. Or Did KW Move to Me?

On March 9, the agents of Realty Executives Southern Arizona, where I had happily worked for five years, were told that the owner had done a year of research and decided that Realty Executives was not the franchise he wanted to own, and henceforth his company would be affiliated with Keller Williams Realty. This was stunning news to all involved.

At the time, Keller Williams was virtually unknown in Tucson. However, it is the third largest real estate company in the United States, behind Coldwell Banker and Century 21. According to REAL Trends 500 Report, from 2008 to 2009, Keller Williams Realty gained 6% in number of transactions, 35% in number of offices, and 19% in number of agents, while all the other national realty estate companies lost market share in those areas. Coldwell Banker's transactions declined 32%, they lost 18% of their offices and 25% of their agents in that one year. The numbers for Realty Executives were -32%, -35% and -32%. I had no idea. Realty Executives had steadily been gaining market share in Tucson for the past five years.

The same day that Keller Williams Southern Arizona was born, Realty Executives International opened a new office on Oracle Road. About 70 agents from the old Realty Executives are now with the new Realty Executives. Of the 317 agents that were with the old Realty Executives on March 10, at least 234 have moved to Keller Williams Southern Arizona. I am one of them. I still have my sweet office overlooking River Road, and I still get to work with the wonderful mentors I've come to admire and appreciate over the past five years.

Keller Williams's business model is more agent-centric than that of any other real estate company. The agents make decisions about company management through the Agent Leadership Council, which is open to the top 20% of the company's agents. Yesterday I went to a meeting to learn more about the ALC so I can decide whether I want to participate this year.

We agents are receiving lots of training, and will be eligible for profit sharing. While of course the company wants its agents to be profitable and successful, success is defined by our quality of life. This is quite different from the usual emphasis of working harder to make more money.

But this isn't all about the agents. Of course, we agents need to give superior customer service in order to have successful businesses and the rewarding lives that successful businesses can fund. For the past two years, Keller Williams Realty has won the J. D. Power award for Highest Overall Satisfaction for Home Buyers.

So, I invite you to join me on this journey. Keller Williams intends to be the leading real estate company in Southern Arizona within three years. Can you help? Who do you know who is thinking of buying or selling a house? Please let me know, and you can be assured that as usual, I will treat his or her real estate transaction as if it were my own.

Daisies

African daisies, a warm spring day, the song of a mocking bird. I feel sorry for anyone who isn't in Tucson today.

Sunbeam has spring fever, too.

Mortgage Rates Could Spike When Government Subsidy Ends This Month

This is by Alan J. Heavens in the Philadelphia Inquirer.

As the spring real estate season kicks in and the tax credit deadline for sale agreements approaches, the government is ending a program that has kept interest rates low and housing-affordability levels high for months.

On March 31, the Federal Reserve will stop buying mortgage-backed securities from Fannie Mae and Freddie Mac, returning control of interest rates to private investors.

For months, industry observers have predicted that once government supports are removed, interest rates will rise quickly, pushing many of the first-time buyers critical to housing’s recovery out of the market.

In late summer and fall 2009, lured by fixed 30-year mortgage rates under 5% and the first $8,000 tax credit, which expired Nov. 30, first-timers pushed sales of previously owned homes to the highest levels in at least three years, reducing record inventories and braking price declines.

That tax credit was renewed Nov. 5 and expanded to buyers who had not purchased a property in five years, although the credit for repeat buyers is $6,500. The second credit expires April 30, is unlikely to be renewed, and remains the engine moving buyers.

As the date for the Fed pullout approaches, analysts now generally agree that an immediate rate spike is no longer the likely result. “We think there will be a significant increase in private demand for mortgage-backed securities to take the place of the Fed,” said David Berson, chief economist at PMI Group in Walnut Creek, Calif. Not enough to offset the Fed’s departure, he said, with rates possibly increasing a quarter of a percentage point, “but a significant one.”

On the other hand, said Holland, Pa.-based economist Joel L. Naroff, low rates are not sustainable, and “the only way to get the market to stand on its own is to get people to become realistic again about prices and rates.” Rates will likely rise, but “the level will still be historically low,” Naroff said.

When rates do rise, likely by year’s end, it won’t be because of the Fed’s action, but “natural macroeconomic forces” like a recovering economy and the high budget deficit, said Lawrence Yun, National Association of Realtors chief economist.

Many Fed officials have emphasized that “high unemployment and tame inflation warrant a continued promise to hold rates very low for a long time,” said Peter Buchsbaum, of Arlington Capital Mortgage in Horsham, Pa.

January Residential Sales Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for January.

Average sales price was the same as in December, and at $201,219, was 2.37% lower than than January 2009. Median sale price was $160,000, which is 3.9% more than in December, and 1.84% less than January 2009.

With 6,618 active listings and 712 sales in January, we have a nine month supply of listings. This is the highest supply we have seen in months. The high inventory can be explained by the 2,424 new listings that came on the market last month, a 35% increase from the previous January. Fortunately, last month also saw a 16% increase in units sold compared to a year ago.

An interesting new table was added to the statistics this month. On page 2, you can see the percentage of active listings that sold in January, arranged by zip code. The highest inventory reduction was southeast of Irvington and I-19 in 85706, where 27% of the listings sold. Unfortunately, 20 of the 34 sales, or 59% were bank-owned houses, meaning the previous owner lost the house to foreclosure. The second highest inventory reduction was southwest of Irvington and I-19 in 85746, where 22% of the listings sold, with 17 out of 30, or 57% of the sales being foreclosures.

I was shocked to find that ever-popular 85719 along Campbell Avenue had the lowest rate of inventory reduction, with only 6 out of 171 listings, or 3.5% sold last month.

As usual, most of the demand is for houses priced under $250,000. With 4,975 listings and 543 sales in this price range, we have a nine month supply.

In the $250,000 to $500,000 range, we have 1,788 listings and 140 sales, for a 13 month inventory.

A 35 month supply plagues owners of homes priced over $500,000, with 1,010 listings and only 29 sales in January

Castle Apartments

I have admired the Castle Apartments at 721 E Adams, on the northwest corner of Euclid, for two decades. Built in 1906 as a hospital, this grande dame of the desert has seen numerous incarnations as a nursing home, convent, and most recently, apartments.

I have always wanted to get inside, and today I did. My newest clients are Zack and Amy Busch, the property managers of the Castle. The building has been in their family since 1998, and it is looking a lot spiffier these days than it did when I first saw it as a grad student.

I was delighted by the lobby, with its suit of armor, saltillo floors, stained glass window, gargoyles, stenciling and medieval banners. The massive wooden arches are everywhere, including in the apartments.

Most of the apartments are long term rentals, but Zack is turning a few into short term for U of A visitors, snow birds, gem show fans and anyone else who wants a unique lodging experience in the center of Tucson.
Check out their web site here for lots more photos.

"Why Didn't Someone Tell Me About This Place Before Now?"

Steve and I went to see "A Prairie Home Companion" at Tucson Convention Center Arena last night. Steve has never been a PHC fan, but I have been following the news from Lake Wobegon for over 25 years. Steve didn't realize that so much of the show was music, and he was really impressed with the three bands.

Fifteen minutes before the show went on the air, Garrison Keillor and Andra Suchy, a soprano from North Dakota, walked around the audience and sang three songs. Paul Simon's "Under African Skies" got delighted applause at the line, "Take this child, Lord, from Tucson, Arizona...".

Invoking his reticent and non-demonstrative Lutheran upbringing, Garrison introduced the next song by saying that if we were sitting next to someone we love, we could sing along, and the person we love might overhear, and we wouldn't have to make eye contact or anything. Steve and I sang along to "I Can't Help Falling in Love with You", a song that has been dear to us ever since we heard Arlo Guthrie sing it many years ago.

They finished, sort of inexplicably, with "I Saw Her Standing There", which was fun when we sang the falsetto notes.

Garrison couldn't get over how wonderful Tucson is. He marveled, "A flowering desert, surrounded by magnificent mountains. Who knew such a place existed?" He told the world about Mt Lemmon, El Charro, San Xavier del Bac and the colorful adobe houses. "Why didn't someone tell me about this place before now?" he wondered. I have a feeling, given his impression of our fair city, and the packed house at TCC, he will be back.

Garrison introduced us to a local Latino band call iMAS. they were just terrific. Gillian Welch is part of the Dave Rawlings Machine, and she led the audience in the closing song, "I'll Fly Away". You may remember her rendition of this song with Alison Krauss in "O, Brother Where Art Thou?"


As the happy crowd left the Arena, feeling proud to live in this place that charmed the radio man from Minnesota, we found a lovely winter sunset illuminating the buildings around the TCC Plaza. On the sidewalk people were singing, "I'll Fly Away". I heard a sweet white-haired woman in the ladies room at El Minuto singing that old bluegrass tune, and I joined her in a chorus. What joy.

Housing Opportunity Index

Okay, this is what I was looking for yesterday. The National Association of Home Builders and Wells Fargo have been calculating a Housing Opportunity Index (HOI) since 1991. Their findings for the third quarter of 2009 are here.

With a median Tucson family income of $57,500 and a median sale price of $159,000, the median-priced house is affordable to 73.4% of the families in Tucson.

Tucson's HOI hit its low in the third quarter of 2006, when only 30.2% of the families in Tucson could afford the median-priced house.

Obviously, a home purchase is affordable to more Tucsonans now because the home prices are a lot lower than they were three years ago. We also need to consider that the HOI is a function of mortgage interest rates, so the unbelievably low interest rates (below 5%) are a significant contributor to housing affordability.

Tucson's HOI is 129th out of 227 metropolitan areas studied.